A
will is a legal document directing who receives
your property at your death. It also appoints a legal representative
to carry out your wishes. Wills only cover property subject
to probate. For instance, jointly owned property, property
in trust and life insurance with a named beneficiary are
just some of the items that pass outside of probate.
Why do
you need a will?
If you die without
one (intestate), your estate is distributed according to
state law. This may or may not be in accord with your wishes.
With a will you can direct to whom your real property goes.
A will can also help to reduce estate taxes. Most importantly,
with a will you can appoint a guardian for your minor children,
should both parents pass away.
Supplemental
Needs Trusts
This type of trust
provides the donor with the ability to provide continued
care for a disabled spouse, child, relative or friend. When
set up correctly, the beneficiary will not lose eligibility
for benefits like SSI, Medicaid and low-income housing.
A supplemental needs trust may be created by the donor during
their life or be part of a will.
Credit Shelter Trusts
These trusts are
designed to take maximum advantage of the estate tax exemption.
As of 2007, the first 2 million dollars of an estate are
exempt from taxes. For example, a husband and wife together
would have no estate tax if their estate were worth less
than $4 million – if they die at the same time. However,
should one spouse die, the surviving partner may then have
an estate worth more than $2 million. When the remaining
spouse dies, the remainder of the estate over $2 million
is subject to taxes.
